Home repair and renovation can be messy. There are many tools and services you may need to improve your living conditions. But these come at a cost, something few can immediately pay for out of pocket. Fortunately there is a loan available for this, the Title 1 Property Improvement Loan. However many people aren’t aware of it. Few people understand the FHA Title 1 loan and how it can benefit them.
Is a Title 1 loan right for you?
Read on to learn more.
Why Title 1?
A Title 1 loan is offered through the Federal Housing Administration, insuring private lenders against loss on property improvement loans they make. It’s meant to help low-to-moderate income families who don’t qualify for Home Equity Loan. It can be used on single-family and multiple-family properties, preserving a historical home, nonresidential locations, fire safety equipment, and manufactured homes. This loan is ideal for minor to moderate repairs and renovations.
Do I Qualify?
In order to qualify you must own the property or hold a long-term lease that lasts at least six months after renovations are complete. For residential purposes you need to have lived there for a minimum of 90 days. Eligibility is determined by the applicant’s employment status (not their income), they can’t be delinquent or in default with another federal loan program, must maintain a debt-to-income ratio of 45% or lower, and be able to pay the loan in regular monthly installments. A minimum credit score isn’t required but lenders will pull a credit report to verify your employment. You may be required to provide bank statements, W-2s, and documents for other sources of income (pensions, disability, etc).
How Can I Use It?
A Title 1 loan can’t be used on luxury items (like swimming pools) or work that’s already been completed. They’re intended to make a home more livable. This means that they can be used for installing appliances like a dishwasher or oven (they cannot be free standing). It helps disabled homeowners make their residence more accessible by creating wider doors or installing ramps. They can also be used for people interested in greener living by the installation of solar energy systems.
Where Can I Learn More?
Making financial decisions can be tricky but there are resources available to help you. To learn more about the different options for your financial situation you may contact us directly.
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